tv Nightly Business Report PBS April 27, 2012 6:30pm-7:00pm PDT
>> tom: the u.s. economy has cooled off, but it continues growing. >> now we're settling in to a more moderate growth phase. we think that will continue for quite some time here. >> susie: ford's profits downshifted in the first quarter, we'll look at what's dragging down the automaker. it's "nightly business report" for friday, april 27. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by: captioning sponsored by wpbt
>> tom: good evening and thanks for joining us. the u.s. economy is growing, but slowly. susie, the official numbers on the first quarter were released today, showing the economy grew at an annual pace of just 2.2%. >> susie: tom, it might not be robust. but optimists note at least the u.s. is growing and has not followed europe economies there have almost screeched to a halt. looking at the numbers, the gross domestic product or g.d.p. of 2.2% in the first quarter was slower than most estimates. most of the growth came from a pick up in consumer spending, homebuilding and auto sales. but a pull back in business spending crimped overall growth. >> tom: the data adds fuel to worries the recovery from the credit crunch is faltering again. erika miller has a closer look from new york. >> we all want stronger economic growth. but in some ways, the slower growing economy we say in the first quarter is actually healthier than the faster gain
we saw at the end of last year. that's because the economy's strong performance in the fourth quarter was due mostly to inventory build-up. as many companies rushed in to take advantage of an expiring tax credit for business investment. that's like loading up on paper towels, simply because they're on sale. in the first quarter, on the other hand, growth was slower. but most of it came from stronger consumer spending. >> when you have 70% of the economy, that's really key to the health of the economy going forward. so we do view it as an encouraging sign that consumers are spending more. that makes it hard to see how you're going to see a sharp slowdown in growth in the near future. >> reporter: what did consumers buy? automobiles. sales rose at their fastest pace in four years. but there's even better news. >> the services spending moved up to 1.2%, which is very good because the services sector is a job creation sector. and when you have people
spending money in the services sector, it more clearly translates into job growth and that's what we need. >> reporter: the biggest headwind for the economy these days is a slowdown in government spending. and that's not likely to change soon. the bottom line here is the recovery still seems to be on track. >> we think the second quarter is going to show growth very similar to the first. we're looking for 2.5% growth. we look for continued moderate growth in consumer spending. >> reporter: no one will be cheering that kind of growth and much depends on what happens to jobs and wages. we'll all hoping to see encouraging signs in next friday's employment report. erika miller, "nightly business report," new york. >> tom: news of slower growth couldn't keep stocks down. they moved higher thanks to earnings and ended with their biggest weekly advance in a month and a half. the dow closed the day up 23 points, the nasdaq added 18. the s&p was up three. the dow posted strong gains on the week: up 199 points or 1.5%.
the nasdaq had the biggest weekly gain of the major averages, rising 68 points or over 2%. the s&p was up almost 25 points on the week or nearly 2%. >> susie: it was a tale of two very different markets for ford in the first three months of the year. here in the u.s. sales surged but it was another story in europe where the region's economic woes took their toll on ford sales in the first quarter. european sales were at levels not seen since 1995. here's a look at the numbers: ford's profits fell 45% to 39 cents a share. still, that was four cents better than analyst estimates. in europe alone, ford lost $149 million in the quarter. so how much longer will europe be a drag on ford's sales? here's what c.e.o. alan mulally told us: >> it's hard to tell right now clearly because it will be
dependent on how the economy recovers. we are though very pleased to see the leadership of europe working very together on what we can do on fiscal and monetary policy to enhance the economic growth in europe again. that's the most important thing for all of us. >> susie: here in the u.s., mulally says he expects to boost production as consumers look to replace older, less fuel- efficient cars. but investors were not as optimistic. shares of ford fell 2% to $11.60. for more on ford and alan mulally visit us at nbr.com. you'll find an interview with "american icon" author, bryce hoffman, on how the automaker made a major turnaround in the midst of the financial crisis. it's in the "features" section of our homepage. >> tom: just as ford's results were better than expected, so have those of many other firms. what's sometimes called "confession season" for corporate america has taken wall street by surprise.
suzanne pratt has a closer look at what's behind the brightening profit picture. >> reporter: what do tech innovator apple, aluminum giant alcoa and internet whiz amazon have in common? no, it's not the "a"-thing. it's the "e"-thing. "e" as in earnings, and we're talking better than expected earnings in the first quarter. sure, the bar was set very low this quarter for corporate america. but, profit growth is no longer in danger of slowing dramatically. in fact with more than half of s&p 500 names reporting, profit growth is up on average 7.2%. that's more than double what analysts we're expecting on april 1. on top of that 73% of big u.s. firms surprised wall street with better than expected results. in a typical quarter 62% usually top estimates. so what's going on? it's all about stronger demand. >> this season what we're seeing is that demand is truly driving
bottom line growth. whereas in the past, companies had to cut costs in order to increase the bottom line. so, even though the growth is significantly weaker than what we've seen over the last four quarters, it's truly this time really driven by demand. >> reporter: despite the surprisingly strong earnings season, the stock market has posted only modest gains in the last three weeks. even the nasdaq with high flier apple is essentially unchanged this month. still, markets pros also point out that stocks were already up sharply coming into earnings season. and, profit scorecards, even really good ones, are basically old news. >> earnings are really backward looking and the markets are always forward looking. and, as we move through the second quarter we're facing greater macroeconomic challenges whether its a weaker u.s. economy, increasing problems in europe, concerns about china. >> reporter: it's still possible for stocks to get a lift from q- 1 earnings season, as it's not
over yet. look for numbers next week out of a.d.m., pfizer and general motors. suzanne pratt, "nightly business report," new york. >> tom: still ahead, from strong earnings to the election. tonight's market monitor guest sees stocks heading higher. mark skousen joins us. >> susie: a bill to freeze rates on some federal student loans passed the house today. sounds like a rescue plan for cash-strapped college students. but the white house threatening a veto. sylvia hall explains. >> reporter: no relief yet for students with stafford loans. while the house approved a plan preventing loan rates from doubling this summer, the white house doesn't like it. the sticking point is over how to pay for it. republicans want to offset the lower rates by taking money from a public health fund created by the health care law. >> if they really wanted to prevent student loans from increasing, they wouldn't seek to cover the cost by cutting funds for cervical cancer screening, but cutting funds for
breast cancer screening, but cutting funds for other women's health care measures. they wouldn't push a measure the president has already said he would veto. >> reporter: republicans call the health care money a slush fund for the health department. but the g.o.p. has problems of its own with a different student loan plan in the senate that would raise taxes on some business owners. >> the other side of the aisle's first reaction is to raise taxes for everything. and ours has always been to reduce spending. and we think that this is the way to go. i think we have just got to find a way to get together. >> reporter: interest rates on stafford loans are scheduled to go up july 31st. and the congressional battle on how to keep the rates low could come down to the wire. sylvia hall, "nightly business report," washington. >> tom: from college students to younger kids, child labor groups reacted with shock today after the labor department bowed to pressure from the agriculture industry and dropped a ban on kids under 16 from doing dangerous farm jobs. the ban would have also kept teens from working in feed lots
and stockyards. but the rules would have excluded kids on farms owned or run by their parents. the labor groups say without the ban, more kids run risk of injury or death using heavy equipment like tractors. >> susie: it could soon be easier to find out who's behind political ads on t.v. the federal communications commission adopted a rule today, ordering broadcasters to detail who's paying for campaign ads and just how much their spending. it wants the data posted on the agency's website. broadcasters call the rule unfair, because it shows rivals what they're charging for ads. the f.c.c. expects the rule to be passed in time for this year's race. >> susie: we wrap up now our
weeklong look at the power of the internet, and how it's bringing people together to accomplish tasks in ways that were never possible with large organizations and businesses. tonight, we talk with the man who coined the phrase "crowdsourcing." jeff howe is the author of "crowdsourcing: why the power of the crowd is driving the future of business." >> hi. >> why don't we begin by you giving us do you think is the best example of >> crowd: sourcing in action? >> that's easy, and it's wikipedia, where you literally have hundreds of thousands of people in dozens of languages creating the largest collective body of knowledge in human history. >> susie: that is-- >> at no cost, by the way. at no cost, i said. >> susie: right, no cost. now, there are a lot of other >> crowd: source activities that
lead to crowd funding, and these crowdfunding sites are popping up like dandelions on the internet. why is that? >> well, i think it's pretty simple. it's a product of the fact that you have, you know, a billion people connected all around the world. and because of that, if you have a neat project that, you know, like a flower that can attract bees, people for 10 bucks or 20 bucks a pop can support something. >> susie: you know, now that crowdsourcing and crowd-fund having really caught on, do you think this could be partial to small businesses that are always struggling to raise funds? >> yeah, if the jobs act, you know, which was just recently passed, has its intended effect, yeah, i think it will be. i thought it was that plank of it at least was quite smart legislation and i think it could
revolutionize how small businesses fund raise. >> susie: how are other presidencies, big and small, tapping into this wisdom of the crowd, and what kind of businesses have you seen that are threatened by this whole trend? >> well, the ones that are threatened by it range from journalism, because suddenly you have the crowd producing the kinds of nonfiction stories that used to be the province of professionals, ie, journalists. but it really runs the gamut. a lot of legacy businesses that once had monopolies on their business, you know, because of the rapid decline in cost costsl of lots of technologies, you know, the crowd can now do it. so anywhere where you have a passion-- and this could be, you know, birding, where amateur birders are enroaching on of professional ornornithologist, you have amateurs creating advertising. a lot of these jobs people love
to do it and they'll do it for very little cost. and that is a big threat to the professional. >> susie: we did a lot of stories this week about creative ways people are turning to crowdsourcing, crowd-funding. why of where do you see crowdsourcing going over the next few years? what's your prediction? >> i think what we're beginning to see and, you know, it's a sign that we now have president obama and supreme court justice samuel alito, using these terms in opinions and legislation that we're looking at mainstream adoption. we're seeing the rise of best practices. you know, we're now entering-- we can argue it's the second decade of social technology, such as this, and we're going to see everything from large businesses like ibm, or xerox, certainly apple, as well as major institutions like our own government and other governments. >> susie: all right. >> adopting practices like this. >> susie: just fascinating.
thank you very much for coming to talk to urge i really appreciate is. >> sure, thank you. >> susie: we have been speaking to jeff howe, author of "crowdsourcing." >> susie: u.s. lawmakers aren't the only ones looking into google's business practices. in a regulatory filing, the company said it's cooperating with investigations in argentina and south korea. both are taking a closer look at its search and search advertising services. meanwhile, u.s. regulators have hired a seasoned litigator for their google investigation: beth wilkinson, a former justice department prosecutor will lead the antitrust probe. >> tom: susie, we saw that lackluster economic growth in the first quarter. we reported on it early ebut it did not dampen investor apitute
for u.s. stocks this friday. instead the market focused concentrated on earnings. the s&p 500 saw some choppiness in its first hour of trading before settling in with some small gains. thanks to the gains this week, the index finished over 1,400 for the first time since the beginning of the month. year to date, the s&p 500 is up more than 11%. online consumer stocks were behind today's market gains thanks to strong earnings from amazon and expedia. travel agent website expedia sky-rocked 25%. volume jumped eight fold after turning in better than expected earnings and revenue. that optimism helped expedia's travel research spin-off trip- advisor. its stock jumped more than 7%. it was spun out of expedia in december and is up 50% since. and amazon. after the big first quarter profits, shares shot up almost 16%. volume popped five fold.
tonight the stock is at its highest price since october. but other consumer-focused stocks didn't fare so well. procter and gamble products may span former laundry soap to batteries, but it expects demand for its products to drop in developed economies. p&g earned one cent more than estimates in its latest quarter, but weaker prices and weaker demand in key markets caused the company to cut its financial forecast. the company also cited price controls in venezuela for cutting into its profits. the warning hit p&g shares, falling more than 3.5%. it was the biggest percentage loser among dow industrial stocks. tonight's low matches its low price in february. procter and gamble also pointed to higher commodity costs such as energy. those highest energy prices helped chevron boost profits from a year ago despite a drop in energy production. the news didn't budge the stock though. it was flat today. chevron is the only major u.s. oil producer to report higher
first quarter earnings this year compared to last year. that came thanks to chevron's energy mix tilted more toward crude oil and not natural gas which hit historic lows during the first quarter. garbage haulers were thrown out after republic services had a double whammy disappointing first quarter results and a lower outlook for the rest of the year. republic shares dropped hard, down more than 13%. the firm also announced its chief financial official will retire next year. but the concerns about a slowdown in business hit competitor waste management with shares falling 3%. volume was five times normal. a weak outlook from medical technology firm all-scripts sent those shares diving. it sees weaker new business and higher costs. shares were among the most actively traded on the nasdaq, as they lost more than a third of their value. a host of analysts cut their
investment ratings in light of the profit warning. the commodity in focus today was corn. the spring plant season is underway and china is a big buyer of american corn sending futures up. corn jumped more than 4% after china made its biggest single day purchase of u.s. corn since 1991. corn futures had been lingering new four month lows before today's jump. and that's tonight's market focus. >> tom: our friday market monitor this week says strong corporate earnings will propel stock prices higher, but forget gold. mark skousen is the editor of the investment newsletter and forecasts and strategies.
mark, you had long been a proponent of the hard metal of gold. why not gold right now? >> well, we've had a really good run over 10 years, and i think it's just tired. and all the technical indicators seem to be in a topping out pattern. plus i think there's a fundamental macroeconomic factor where the error of excessive government spending and easy money is gradually coming to an end. politicians are recognizing they're going to have to move towards austerity. that's bad for gold. >> tom: we saw that in the first quarter of g.d.p. government spending was a bit of a drag on the u.s. economy. if it's bad for gold you think that kind of environment is good for stocks, why? >> now let's not misinterpret that. any time government spending goes down, that's good for the economy. i don't buy into the q.d.p."p" that government it is an important positive indicator. if it was going up dramatically, that would be bad but the fact that it's pulling back is a good
sign gloom in this environment, why are you moving out of gold, out of that hard commodity and into equities? >> i think we're seeing a sea change. we're seeing corporate profits very strong. there's cost cutting going on. mind you do have some equity stock picks here. beginning with corning, glw, this one saw a nice pop earlier this week off the heels will of the apple story with the possibility of its providing perhaps some screens for the as-yet-to-be-determined apple tv. is this you trying to play the apple phenomenon? >> absolutely. this is the turnaround story. of course, the lcd market has been very weak and that has hurt corning, but they're diversifying. they beat expectations this past week, and they are a agreement play on the ipad orbit iphone. they have a joint vent worry samsung. so that's the way we're playing it. and i think i think it's going to continue to do really well as a turnaround. >> tom: an untraditional play on apple. awe also like methanex, the
company that produces methanol, the simplest of alcohol, wood alcohol. it's a new high tonight. are you chasing it? >> you know, not really. it's still selling at nine times, maybe 10 times earnings, and they're, i think, looking very good in terms of their balance sheet. they're going to pay off their debt, they said, in the future. plus here's the play on this-- they are a great way to play on the cheap natural gas. natural gas is the main component where methanol comes from. >> tom: mark, were last here in early november. you liked sedril, up 25%. enterprise products partners, and you also liked a teen retailer, believe it or not, you're a fashion force. american eagle outfitters. these are just stock prices, dividends on top of this. do you still like these?
>> actually, i like all three of them. i actually hold position in addition the two energy stocks, enterprise and cdrill, and those still look like they're very strong, and frankly the fashion part looks really good, too. that's a turnaround story and it's a little more risky but i do think all three look very good, very strong right now. >> tom: i can just picture you doing research on the weekends in the mall at american eagle. >> can't you tell? the stylish outfits. >> tom: mark do you have positions in everything we mentioned tonight? >> just the two energy positions of enterprise and cdrilling although i'll probably be adding these other positions after the program. >> tom: all right, our full disclosure there with our friday market monitor from the nasdaq tonight is mark skousen. >> susie: all next week on n.b.r.-- it's the most- anticipated i.p.o. ever. we take a look at the facebook economy. we start the week with a look at how businesses are using facebook to connect with
customers and boost profits. plus, omaha gets ready to host warren buffett's annual shareholder meeting next weekend. our coverage starts friday. and, excitement in the midwest as farmers kick-off the spring planting season, are they gearing up for a bumper crop? and finally tonight, some food for thought from author and educator lou heckler. tonight, lou's been thinking about turning the other way. >> when i was a young fellow, i played organized baseball for eight years. for seven of those years i batted right-handed and was-- how to say this delicately-- a lousy hitter. my dad would patiently pitch to me at a neighborhood ballpark but i just couldn't hit well. one day he had an idea: turn around and bat left-handed, he suggested. i thought it was an odd idea, but i gave it a try. the results were amazing. i could see the ball better and my swing even felt more natural. when it came to baseball, i was a natural leftie and didn't even know it. that year i batted over .400 in
colt league. i don't know if it's routine or tunnel vision, or whatever else you may want to call it, but i have a feeling most of us are guilty of always looking at things in one way. i'm pretty sure that applies to political philosophies-- our willingness, or not, to accept new ways of doing business or even what food we eat. i've been thinking that i need to turn around more and see things from different angles. i've always loved roger von oechs book a whack on the side of the head. he calls the mindsets that stop our creative thinking "mental locks" instead of "mental blocks." his idea is that we have lots of fresh ideas, but we lock them out because they don't match what we already know. so, unlock some of those wonderful ideas by turning around and looking the other way. maybe you'll hit for a better average, too. i'm lou heckler. >> tom: that's "nightly business report" for friday, april 27. goodnight, everyone and goodnight to you, too, susie. >> susie: good night, tom. have a great weekend everyone. we'll see you online and back here on monday night. "nightly business report" is made possible by: